Great moment in euphemisms: Employers may pay to push their workers off of health insurance

posted at 2:01 pm on May 13, 2014 by Ed Morrissey

NPR deploys a rather euphemistic headline to describe a long-predicted consequence of ObamaCare’s employer mandate, which hits this fall for larger employers. The headline, perhaps supplied by partner Kaiser Health News, reads “Employers May Start Paying You To Buy Health Insurance.” What it actually means is employers may pay more in wage compensation while kicking employees into ObamaCare exchanges:

What if employers started giving workers a chunk of cash to buy health insurance on their own instead of offering them a chance to buy into the company plan? Are workers ready to manage their own health insurance like they do a 401(k)?

The idea that employers might drop their health plans and replace them with a “defined contribution” for employees has been around for years. It’s one way for employers to control their expenses in the face of the relentlessly rising costs of health care.

In fact, it’s been around long enough for ObamaCare critics to point out the obvious incentives to do so within the law. While Barack Obama insisted that people could “keep their plans,” especially those who got them through their workplace, the rapid increase in health-insurance premiums are pushing employers to get out of the health-insurance business.

HHS’ own studies on this suggested that the employer mandate could kick as many as 93 million Americans out of group health insurance and into the individual-plan market — where the cost of taxpayer subsidies would skyrocket. Some of those employers might offer higher wage compensation to make up the difference, but some of them may not. And that bump will be a one-time affair, while escalating costs for health insurance will fall entirely on the worker. That’s why employers will be glad to get rid of this burden.

NPR and Kaiser believe this is the perfect time to make that transition, because the technology is working so darned fantastic:

Now that the Affordable Care Act has made non-company plans more accessible and affordable by creating online marketplaces where people can shop for coverage, the idea is gaining traction.

“The technology has caught up to the concept,” says Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute.

Really? The price tag for four states’ failed exchanges run to about a half-billion dollars, and that doesn’t take into account what the federal exchange failure has cost. Prior to ObamaCare, insurers had their own web portals for consumers to select plans, and those worked reasonably well (I had to research this early on in my blogging career). The web-portal technology had already caught up with the market, which is why the government failures are such an embarrassment.

And guess what? This new arrangement has some serious tax consequences for workers, too:

If an employer dropped group coverage and instead offered employees $5,000 to buy an individual plan on an exchange, workers would owe income tax on that amount. Employees earning less than 400 percent of the federal poverty level (right now that’s $45,960 for an individual or $94,200 for a family of four) could qualify for tax credits to reduce the cost of their monthly insurance premium, but workers who earn more than that wouldn’t benefit.

Employers may choose the best of both worlds for themselves — a private exchange system which protects them from fines, but dumps employees with the taxable lump sum off of group coverage. This actually isn’t a bad model for free-market reform, but the layers of mandates and costs from ObamaCare makes this choice the worst of both worlds for workers.

NPR seems intent on selling this as a funemployment kind of outcome. I doubt workers will be that cheery about the coming seismic shift as the spin on this article suggests.

Plus, if the employers promote too loudly that the “pay raise” is for PlaceboCare insurance bought on the exchanges, that would be illegal as employers are not allowed to directly subsidize any payment to the exchanges.

The beat goes on. Anytime gummint wants to screw the People in some fashion, it simply changes the definition of past, acceptable terms. Fr’instance, if the EPA wants to steal some farmer’s land, it simply redefines what a ‘wetland’ is. If The One (via BLM) wants to keep all pipelines from goin’ south into Texas, just ‘settle’ the non-existent argument between Ok and Tx ref the red River boundary by expropriating a wide swath of both sides of the river along its entire length. Problem solved. If O’ wants to create a single payer, limited health provider system, just change the definition of ‘Healthcare’. BTW, ‘is’ is still ‘is’.

Sorry … either the post or the article itself is BS. There is nothing in ZeroCare that I’ve ever heard of that allows an employer to “pay more” to avoid the mandate (assuming it is ever enforced).

corona79 on May 13, 2014 at 2:17 PM

Neither this HotAir post nor the NPR post contain the word “avoid”.

Do you not understand the concept of employers dropping health coverage altogether, pushing their employees to get their own individual coverage, with the employer MAYBE paying the employee more in base compensation?

(But maybe not paying employees enough to compensate the their loss of employer coverage, and maybe not paying them anything more at all…)

‘As you can easily see,’ Samuelson said, ‘we’ve been getting better and better. The trend is clear.’ He looked at us expectantly in the dim conference room, his outstretched left hand illuminated by the glare of the projector. Silence, then Irene spoke up: ‘Well, what you’re calling a trend only goes back several weeks. If you went back several quarters the graph would actually show an overall decline with a slight improvement at the end….’

What it actually means is employers may pay more in wage compensation while kicking employees into ObamaCare exchanges

Ed, you were diligent in emphasizing the operative word in that sentence. I took the liberty to BOLD it.

MAY. Not WILL or MUST.

How many may? How many WILL NOT.

I’d be willing to bet that some will but many will not. Why would they? To show their employees that they care? What incentive is there really? With the record unemployment (actual) many employers will just kick the complainers to the curb and hire someone to replace them at a lower wage.

..tangential and thoroughly O.T.: Have you ever listened consistently to NPR? I don’t very often (short afternoon commute) but enough to get a representative sample. Point is, is it just me, or do all of their male announcers have a fruity, limp-wristed lisp? (Or is it just the BC engineers cranking in that annoying audio pre-emphasis?)

I swear, when I hear these little girlie-men prance about, I get a visual image of that cocoa-swilling ObamaCare jammie boy with gonads the size of BBs.

Yet another example of how obama and the democrats HATE the middle class and want to see them destroyed.

HumpBot Salvation on May 13, 2014 at 2:38 PM

Its natural for Leftists to hate the middle class. Its a class that has always been historically pretty much politically and economically independent and not clearly beholding forever to one particular party.

For the overall good of our nation and for social justice and income inequality it MUST be destroyed.

I actually agree with you right-wing nuckle-draggers on this one. Obamacare needs to go – single-payer is the only fair and workable plan.

Unlike you hicks (who have spent your entire pathetic lives in Alabama or some other backwater state), I’ve spent over 20 years living in EU countries and witness the true fruits of unbridled progressivism.

Socialized medicine has a much, much lower cost for its citizens…in fact, it’s usually free. Admittedly, they do pay a very modest 60% of their income in federal tax, a miniscule 19% value-added tax on items they buy, and pay a very reasonable $9 for a gallon for gas. But it’s an extremely small price to pay when you consider the cost of medical insurance.

Joe Biden recently admitted that the middle class was even worse off than before Barky was ordained.

D-fusit on May 13, 2014 at 2:43 PM

Joe made a mistake.

Obamalinguistics has redefined “middle class” to mean net tax recipients: the recipients of government largesse, especially when referring to the more-or-less means tested programs.

The people we USED to think were the middle class, the net tax payers: people who worked for a living, raised their own families, owned their own businesses, paid their mortgages or made a payroll are now either classified as the Rich™ and should be taxed more or are ignored entirely.

I actually agree with you right-wing nuckle-draggers on this one. Obamacare needs to go – single-payer is the only fair and workable plan.

Unlike you hicks (who have spent your entire pathetic lives in Alabama or some other backwater state), I’ve spent over 20 years living in EU countries and witness the true fruits of unbridled progressivism.

Socialized medicine has a much, much lower cost for its citizens…in fact, it’s usually free. Admittedly, they do pay a very modest 60% of their income in federal tax, a miniscule 19% value-added tax on items they buy, and pay a very reasonable $9 for a gallon for gas. But it’s an extremely small price to pay when you consider the cost of medical insurance.

What BS. The UK is the only major country to have a Single Payer system in the EU. All the rest have some form of Romneycare. It is no accident that the UK ranks last in medical care in the core EU group. Even some former Warsaw Pact countries have better medical care.

Plus, if the employers promote too loudly that the “pay raise” is for PlaceboCare insurance bought on the exchanges, that would be illegal as employers are not allowed to directly subsidize any payment to the exchanges.
Steve Eggleston on May 13, 2014 at 2:07 PM

Well except of course in the case of our bureaucratic federal employee overlords.. I still can’t believe that we all just rolled over and this complete twisting of the law was allowed to stand in order to accommodate those who wrote that garbage bill and forced it down our throats. The ONLY ones required to follow and pay for it are the ones who didn’t want it! It does not bode well for Americans standing up and fighting the future battles ahead if this small skirmish was just too much for us… And they know it which is why they don’t care how horribly their laws and regulations effect us.

I discussed this a few days ago on another thread, but this is exactly what I did with my business. There are only 30 employees, so we’re not subject to OCare, but the ACA made our insurance rise significantly nevertheless. So, I told my employees to pick out a bronze plan on the exchange and gave them a raise equal to the cost. The coverage they are getting is worse than they had before and their deductibles are insane, but their choice was keeping their workplace open or managing their own insurance.

I’ve gotta tell ya…they REALLY hate managing their own insurance. I think the reason behind this is that it was something they never worried about before, but now they have to shop around for a policy and anticipate the yearly price increases–something that I was doing for them before. If more people are forced into this situation, the hate for OCare will continue to grow.

Shouldn’t conservatives be happy to see a separation between employment and insurance? After all, it was progressive/liberal policies (in part: wage controls + untaxed health benefits = spiralling health coverage costs) that got us into the situation where health insurance is so expensive and individuals are divorced from the actual costs of their care.

I don’t know what the solution is, but it seems that this has been a conservative goal. Is it suddenly not one, if it is achieved by a liberal administration?

Conservatives support decoupling health insurance from employment with the belief that free-market capitalism principles could help to lower system costs.

Note that I said free-market capitalism, not state-managed capitalism.

And the timing to try to push through this change is really bad. Our economy is soft and has been for a good while. Over 10% of our population is employed in the healthcare industry. Healthcare providers have traditionally relied upon the higher reimbursement rates from employer-sponsored health insurance policies to offset the losses they incur from Medicare and Medicaid. This has been part of their payer mix model for years.

Now they are looking at alterations in the payer mix model coupled with increases in demand coupled with increasing business operations costs and higher risks coupled with delays in reimbursements from third party payers due to confusion related to the exchanges….

I discussed this a few days ago on another thread, but this is exactly what I did with my business. There are only 30 employees, so we’re not subject to OCare, but the ACA made our insurance rise significantly nevertheless. So, I told my employees to pick out a bronze plan on the exchange and gave them a raise equal to the cost. The coverage they are getting is worse than they had before and their deductibles are insane, but their choice was keeping their workplace open or managing their own insurance.

I’ve gotta tell ya…they REALLY hate managing their own insurance. I think the reason behind this is that it was something they never worried about before, but now they have to shop around for a policy and anticipate the yearly price increases–something that I was doing for them before. If more people are forced into this situation, the hate for OCare will continue to grow.

ReaganWasRight on May 13, 2014 at 3:40 PM

I like your approach – but may I suggest they/you don’t just look at the Exchange rates. Plenty of quality insurance programs that meet the ACA mandate, but aren’t on the exchange; similar to my example above.

I have had company managed and personally managed my family’s insurance, so not a big deal for me; but quite frankly I think the ease is something most people won’t freak out about. And you no longer have to manage your employees insurance, which frees up your “macro” time.

Just asking. I’d be interested in knowing how this would really affect employees if there were no executive delays.

Maddie on May 13, 2014 at 3:50 PM

No. In this part of NC…almost everyone is conservative. And no. I’m not saving money right now, but I may in the future. I will probably give employees a healthcare raise every couple of years to help cover some of their insurance increases, but this probably won’t be enough to cover everything. PLUS…these people now have to pay additional taxes.

I feel bad for my employees. They work manufacturing furniture and their life does not revolve around their job. They want to come in, get their 7 or 8 hours out of the way, and go home a do the things that interest them. Worrying about insurance is a burden they have not had before.

Shouldn’t conservatives be happy to see a separation between employment and insurance? After all, it was progressive/liberal policies (in part: wage controls + untaxed health benefits = spiralling health coverage costs) that got us into the situation where health insurance is so expensive and individuals are divorced from the actual costs of their care.

I don’t know what the solution is, but it seems that this has been a conservative goal. Is it suddenly not one, if it is achieved by a liberal administration?

xNavigator on May 13, 2014 at 3:49 PM

I would be happy with this as long as

markets are free of government meddling

everyone writes a quarterly check to the government so that they can truely know what is being robbed from them.

I like your approach – but may I suggest they/you don’t just look at the Exchange rates. Plenty of quality insurance programs that meet the ACA mandate, but aren’t on the exchange; similar to my example above.

I have had company managed and personally managed my family’s insurance, so not a big deal for me; but quite frankly I think the ease is something most people won’t freak out about. And you no longer have to manage your employees insurance, which frees up your “macro” time.

Odie1941 on May 13, 2014 at 3:59 PM

Well, to be honest, the only thing keeping their insurance rates somewhat reasonable was being on the company group plan. Most everyone that works for me is over 40 and many smoke, some are overweight, and a few have preexisting conditions such as diabetes. I went the private route to start with and most insurers didn’t want to touch these guys. A few could get good individual policies (and they did), but the exchange was the only way I could get some of the policies. Besides, I chose the bronze plan as a baseline for everyone, so if people figured out how to get insurance cheaper than that–they got an actual raise.

My goal was to spend more time on growing the business and less time being an insurance agent. It’ll definitely be good for small businesses not to worry about insurance any more and I think people paying their own way will take better care of themselves. Having said that, I think people see insurance like they do withholding in their checks. Taxes don’t seem high because they taxes are deducted from each paycheck and they have little idea what they are paying overall. If they ever had to write the IRS a check for their yearly taxes–they’d be breaking out the pitchforks. Insurance has become very similar. Now that they are managing it themselves, they’re more likely to press for action to get their costs down. That’s a double-edged sword though. They may demand more competition or they may push off the responsibility (and worry) off on someone else–namely the government through single-payer.

Now that they are managing it themselves, they’re more likely to press for action to get their costs down. That’s a double-edged sword though. They may demand more competition or they may push off the responsibility (and worry) off on someone else–namely the government through single-payer.

ReaganWasRight on May 13, 2014 at 4:29 PM

Tell me, how do you do this in the face of federal law that says no one can be denied healthcare?

The only way to reduce the price of something is to reduce the cost of providing it. Forcing some people to pay for the healthcare of others who are not paying results in continuing increasing costs (because people discover they don’t need to pay….the law requires someone else to pay….so they don’t pony up).

Another way is to implement price control. That is what ObamaCare really is. It does nothing to reduce the cost of healthcare. And the “controlled price” is a lot higher than the “awful, low quality” system it is destroying.

There has to be the lie that the “raise” is for something other than buying PlaceboCare insurance on the exchanges for the scheme to be legal.

Steve Eggleston on May 13, 2014 at 2:39 PM

I’m thinking many employers might just mention that. “Hey, we can’t afford to continue business while providing your healthcare insurance. I would like to give you guys a raise to compensate, but I’m afraid that is against the law.”

The only way to reduce the price of something is to reduce the cost of providing it. Forcing some people to pay for the healthcare of others who are not paying results in continuing increasing costs (because people discover they don’t need to pay….the law requires someone else to pay….so they don’t pony up).

Another way is to implement price control. That is what ObamaCare really is. It does nothing to reduce the cost of healthcare. And the “controlled price” is a lot higher than the “awful, low quality” system it is destroying.
BobMbx on May 13, 2014 at 5:43 PM

Precisely Bob. Thousands of pages, and NOT ONE thing that does anything to help reduce the cost of delivering healthcare. Instead of say, tort reform, or relaxed interstate rules that promotes innovation and competition, let’s just tax medical devices! Brilliant.

Tell me, how do you do this in the face of federal law that says no one can be denied healthcare?

BobMbx on May 13, 2014 at 5:43 PM

You can’t do it in the face of federal laws. The only upside is that my employees have a more personal stake in things and are much more likely to sound off to their reps. I’m not sure it will make a difference, but I guess it’s better than nothing.

Our pharmacies in Southern California may be closed starting May 19, 2014.

The Guild for Professional Pharmacists, which represents 1,400 pharmacists throughout the Kaiser Permanente Southern California Region, informed us of a possible work stoppage starting May 19, 2014.

We’re here for you
Our top priority is your safety and care. In case the work stoppage does occur, we want to let you know ahead of time to minimize any inconvenience this may cause. Here’s what you should know:

Our medical facilities will remain open, so your health care and appointments will not be interrupted.
Hospital pharmacies will be open to provide pharmacy services for hospitalized patients.
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If you have a prescription you need to fill or refill, we encourage you to do so before May 19 (you will still be able to get your prescription on or after that date at other outside pharmacies or by phone or online through our mail-order service).

Rest assured that we will contact you with updates as we get more information. Learn more about filling your prescriptions during this time.